FG Mulls N30bn Annual Gratuity For Civil Servants

The federal government is considering the introduction of an annual gratuity payment estimated at N30 billion for civil servants in treasury-funded Ministries, Departments, and Agencies (MDAs), under a new framework being developed by the National Pension Commission (PenCom) in collaboration with the Office of the Head of the Civil Service of the Federation (OHCSF).

The proposed gratuity scheme, which will benefit retirees under the Contributory Pension Scheme (CPS), was disclosed during a high-level meeting in Abuja on June 13, 2025.

The director general of PenCom, Ms. Omolola Oloworaran, announced the plan while on a courtesy visit to the Head of the Civil Service of the Federation, Didi Esther Walson-Jack, according to a statement that was issued by PenCom on Tuesday.

Oloworaran said PenCom is working out modalities for the establishment of the scheme in accordance with Section 4(4)(a) of the Pension Reform Act (PRA) 2014.

The estimated cost of N30 billion annually, she explained, was based on the calculation of 100 per cent of the last gross annual remuneration of retiring federal employees—a figure confirmed by the 2024 Stakeholders Committee on outstanding pension liabilities.

She described the initiative as “a modest but impactful intervention” aimed at improving the welfare of retirees who have served the nation with dedication.

The PenCom boss also addressed the longstanding issue of delays in pension payments due to accrued rights liabilities. She recalled earlier progress achieved through collaboration with the OHCSF, which included securing a Federal Executive Council (FEC) approval for a N758 billion bond to settle outstanding liabilities.

In a bid to further address these issues, Oloworaran unveiled a one-time comprehensive online enrolment exercise, scheduled for August 2025. The exercise will help determine the accrued pension rights liabilities of all federal employees in service before June 2004. According to her, this will pave the way for PenCom to present the actual liability to the federal government, with the goal of raising a bond to clear it once and for all.

Each eligible civil servant’s accrued pension rights will be credited into their Retirement Savings Accounts (RSAs), allowing them to begin earning returns on the funds immediately. This system, she noted, would insulate pension administration from political changes as Pension Fund Administrators (PFAs) would assume full management control.

Oloworaran also revealed that PenCom is developing a digital application to streamline the enrolment process. The application is expected to be deployed alongside the August exercise, and she called for the OHCSF’s support in issuing a directive mandating all MDAs to participate and submit the required documentation.

To tackle the challenge of uncredited pension contributions, especially among MDAs not enrolled on the Integrated Payroll and Personnel Information System (IPPIS), the PenCom DG disclosed that a new Pension Contribution Remittance System has been introduced. It requires the use of approved Payment Solution Support Providers (PSSPs) to ensure proper remittance of contributions into employees’ RSAs.

She urged the Head of the Civil Service to issue directives to the IPPIS Office in the Office of the Accountant General of the Federation (OAGF), as well as to tertiary institutions and other non-IPPIS MDAs, to adopt the new remittance approach starting from June 2025.

Responding, Walson-Jack commended PenCom for its forward-thinking initiatives and pledged her full support for the proposed reforms. She acknowledged that the introduction of a gratuity scheme aligns with the aspirations of civil servants and promised to issue the necessary circulars to facilitate implementation.

Both PenCom and the OHCSF also agreed to establish a Standing Committee to drive the proposed reforms, develop modalities for implementation, and proactively address any emerging issues.